Optimism $OP Buyback and Burn to increase price of the token!

A buyback and burn alone is not enough IMO. I’ve written a post on a solution that includes rewarding part of the ETH fees to stakers and using another part to also buy and burn. This way the token becomes yield bearing while increasingly scarce. That is a golden combination that surpasses a simple buy and burn. Dont get me wrong, a buy and burn would be good, but why choose good when you can have better?

Heres my original post:

https://gov.optimism.io/t/the-best-of-both-worlds-op-eth/2391

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I was not comparing OP to UNI, but pointing out how your statement was not accurate, which it is not.

This is the problem, using market cap as the definition of success. There are other metrics that should be used to measure success. TVL, number of users, number of transactions, for example.

If the sole focus is make token go up, yes focus solely on market cap and burn all the tokens, turn it into a gas token, and punish people who sell.

Buyback and burn is a blanket term in this case and of course we can get creative and innovative with the idea.

I’m not just responding to you. Great example of someone that thinks this tread revolves around one person. I was just making a point that this is just another proposal that is focused solely on token go up, which it is. You can write paragraphs that say otherwise, but that’s just a bunch of words saying nothing but how do we make token go up.

MakerDAO is probably the longest running example of a buy and burn design and some can say it has had mixed results.

More DAI creation via Maker Vaults = more stability fees paid/revenue to the protocol.
If there are more fees that means MKR holders are making good decisions on managing the protocol, from setting fees, on-boarding collaterals and managing risk (to name a few parameters).

Poor governance decisions would then = less revenue and less burning of MKR.

Increase in MKR price has not always correlated with burning and there is currently a divide in the community on re-starting the burn (which was voted on to pause in order to increase the surplus buffer to a larger size for growth objectives and risk management).

Regardless of ones view to burn or not to burn, the more important issue is that once there is an expectation to burn OP tokens as part of the system mechanics, it will be very complicated for the community to undue that promise should it turn out not to be the best technique long term.

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Individuals respond to economic incentives. If we provide a mechanism whereby token holders benefit from increased economic activity in the ecosystem, then they will be incented to take governance seriously and support proposals that enable growth. Without any economic link, then there is no positive feedback loop and apathy persists. The buyback and burn mechanism has been implemented and effective for multiple top protocols. I fully support diverting 10-20% of revenues towards this mechanism.

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Again, this is not about pumping the token. Its about increasing the market share so $OP can be better positioned. Only way to communicate in this forum is to use words and mean it. Thats how productive communication goes; saying you never meant it is not a good defense to invalidate another’s statement.

Yes, I agree. This is just a sad attempt to artificially prop the price up. Before submitting proposals some people need to read the mission and vision of the Optimism collective.

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Adhering to a core belief of optimism, we should continue with the belief that impact=price.

This is NOT the core belief, the core is impact = profit and that is profit to the individual(s) who created the impact, not the ecosystem as a whole that benefited from the impact.

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My god are we here to argue semantics? On that same not how are individuals who created the impact not a part of the ecosystem as a whole?

We are not here to argue semantics. But there is a difference between price (which implies price of the token) and profit (which just implies excess funds).

The whole point of impact = profit is to reward impact, not pump $OP bags.

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This article does not have any valid economic concern or merit. Buy back and burn does not contribute to the growth of the OP eco-system. We as a community need to promote OP for mass adoption through out web3 communities and make it more attractive for users to use OP network.

We can also invite and fund developers to build new infrastructure to launch new projects on OP to create more diverse and vibrant eco-system. This will have positive impact on price over time. It’s not a sustainable option to pump token price artificially.

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VERY GOOD PROJECT…need agressive marketing to shine

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The price doesn’t matter, the eco is.

I agree. Op token is very important for builders and supporters, it should be valuable.

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I beg to differ. Eco cant grow without a respectable market cap.

$OP buyback and burn sounds good to me. It should sustainably increase the price over time

I believe a buyback and burn program will ultimately increase ecosystem growth and enable a higher degree of public goods funding than would exist without the program:

  1. Aligns incentives between governance and ecosystem growth: If we create a feedback loop whereby governance decisions that promote sustainable ecosystem growth have a positive impact on $OP value, then on the margin you will have higher participation and decisions that are more in line with that outcome. Show me the incentives and I will show you the outcome.

  2. Improves incentives for new ecosystem participants: Optimism is actively utilizing $OP tokens to incentivize ecosystem growth, both through future airdrops and allocations to ecosystem protocols for distribution. But if that $OP token is of minimal value, the incentive for users to move liquidity to $OP diminishes. L2’s will be an intensely competitive landscape where network effects (liquidity) are critically important for future growth. Creating a mechanism to enable $OP to accrue value is an important competitive lever for the ecosystem.

If we allocate 20% of profits to a buyback program and 80% to public goods, I ultimately believe we will be able to grow the ecosystem and fund more public goods than we otherwise would have, to the benefit of Optimism and the broader Ethereum ecosystem (would be good to put numbers around this assumption, of course).

Thank you for the patience and calm in responding to posts like this. Very much appreciate your replies in this thread.

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There’s an interesting proposal gaining support which has burning OP tokens baked in

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